High Unemployment Yet Few Small Firms: The Role of Centralized Bargaining in South Africa

Jeremy R Magruder
2012 American Economic Journal: Applied Economics  
South Africa has very high unemployment, yet few adults work informally in small ...rms. This paper tests whether centralized bargaining, by which unionized large ...rms extend arbitration agreements to non-unionized smaller ...rms, contributes to this problem. While local labor market characteristics in ‡uence the location of these agreements, their coverage is spatially discontinuous, allowing identi...cation by spatial regression discontinuity. Centralized bargaining agreements are found to
more » ... ments are found to decrease employment in an industry by 8-13%, with losses concentrated among small ...rms. These e¤ects are not explained by resettlement to uncovered areas, and are robust to a wide variety of forms for average spatial heterogeneity.
doi:10.1257/app.4.3.138 fatcat:mhr4udtagvfrdijqwvwkfh7egi